Better Fill up today

[larryJ]

Thanks for clearing that up for me.  I wasn't thinking "strategic petroleum reserve" and forgot that part.  I sure am glad you are around to keep me aware of the world around me. 

Larryj

[frawin]

October Crude settled at $68.05, down $1.95 on the day, October Natural Gas settled at $2.821, down $0.156 on the day.

[frawin]

The Doe-EIA report comes out later today, it will be interesting to see how it compares to the API Report from yesterday.


Oil Rises Before Report Forecast to Show Drop in U.S. Supplies


By Grant Smith

Sept. 2 (Bloomberg) -- Crude oil rose for the first time in three days on signs that excess U.S. inventories are contracting as demand for winter fuels starts to pick up.

The U.S. Energy Department will probably say crude stockpiles dropped last week, according to a Bloomberg survey. Supplies are 12 percent higher than a year ago after the recession cut demand, which normally accelerates in the fourth quarter. The American Petroleum Institute said yesterday that crude supplies declined by 3.19 million barrels.

"All the indicators point that the worst of the crisis is behind us," said Andy Sommer, an analyst at Elektrizitaets- Gesellschaft in Dietikon, Switzerland. "Demand is slightly picking up, and with time the huge inventory overhang will draw down."

Crude oil for October delivery rose as much as 75 cents, or 1,1 percent, to $68.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $68.61 at 11:55 a.m. London time. Oil in New York has traded between $65 and $75 a barrel since July 31.

Yesterday, the contract fell 2.7 percent to $68.05, the lowest settlement since Aug. 17. Prices climbed as much as $1.41 a barrel yesterday after reports showed that manufacturing in the U.S. and China, the two biggest energy users, expanded in August. The two countries consume more than 30 percent of global crude-oil output.

'Turning Around'

"The broader economy has shown signs it's turning around," said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney.

U.S. crude oil inventories dropped to 343.5 million barrels in the week ended Aug. 28, the API report showed.

A U.S. Energy Information Administration today is likely to show stockpiles declined, according to a Bloomberg News survey. The data may show supplies fell 900,000 barrels from 343.8 million, according to the median of responses from 11 analysts.

Distillate fuel inventories, including diesel and heating oil, climbed 920,000 barrels to their highest level since 1983, according to the API. The Energy Department report will probably show supplies rose 775,000 barrels from 162.4 million the prior week.

Gasoline supplies fell by 2.81 million barrels to 206.9 million last week, the API report showed. Inventories probably fell 900,000 barrels, a sixth weekly decline, according to the Bloomberg survey.

OPEC Targets

OPEC is likely to leave oil production targets unchanged when it meets next week in Vienna, an official from a Persian Gulf member of the group said.

The Organization of Petroleum Exporting Countries expects oil demand to recover and is unlikely to change production quotas to avoid derailing the global economic recovery, said an official who declined to be identified because a final decision hasn't been made. OPEC meets next on Sept. 9 in Vienna.

OPEC output averaged 28.445 million barrels a day last month, down 40,000 from July, according to a Bloomberg News survey of oil companies, producers and analysts. The 11 members with quotas, all except Iraq, pumped 26.055 million barrels a day, up 20,000 barrels from the previous month and 1.21 million more than their target.

Brent crude oil for October settlement was at $68.35 a barrel on the London-based ICE Futures Europe Exchange at 11:55 a.m. local time.


Last Updated: September 2, 2009 07:11 EDT

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BP Makes 'Giant' Oil Discovery in Gulf of Mexico (Update1)



By Eduard Gismatullin

Sept. 2 (Bloomberg) -- BP Plc, Europe's second-largest oil company, reported a "giant" discovery at the Tiber Prospect in the U.S. Gulf of Mexico that may contain more than 3 billion barrels, sending its shares higher.

The well is located in Keathley Canyon block 102, about 250 miles (400 kilometers) south east of Houston, the London-based company said today in a statement. The Tiber well was drilled to a total depth of approximately 35,055 feet (10,685 meters), greater than the height of Mount Everest.

The latest discovery will help BP, already the biggest producer in the Gulf of Mexico, boost output in the region by 50 percent to 600,000 barrels of oil equivalent a day beyond 2020. It will also allay concerns over BP's reluctance to invest heavily in unconventional projects, such as oil sands in Canada, to replenish reserves as maturing fields age.

"It will take a while to develop, the second half of next decade, but it's very important," Jonathan Rigby, an analyst at UBS AG, said in a telephone interview.

BP is developing nine projects in the Gulf of Mexico and in 2007 overtook Royal Dutch Shell Plc's output in the region.

Kaskida Find

"It will be bigger than the 3 billion barrels" of oil equivalent discovered at the nearby Kaskida field, said Robert Wine, a London-based spokesman at BP. "This is a whole new geological play we've got here."

BP gained as much as 20.4 pence, or 3.9 percent, to 539.9 pence in London after the announcement and traded 17.5 pence higher at 537 pence at 11:41 a.m. local time.

"Tiber represents BP's second material discovery in the emerging Lower Tertiary play in the Gulf of Mexico, following our earlier Kaskida discovery," Andy Inglis, chief executive for exploration and production at BP, said in the statement.

BP is operator of the project with a stake of 62 percent, while Petroleo Brasileiro SA, Brazil's state-controlled oil company, holds 20 percent and ConocoPhillips 18 percent.


Last Updated: September 2, 2009 06:50 EDT

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October Crude settled at $68.05, unchanged on the day, October Natural Gas Settled at $2.715, down $0.106 on the day.

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Oil Rises Along With Equities After U.S. Gasoline Supply Drops



By Grant Smith

Sept. 3 (Bloomberg) -- Oil rose and traded near $69 a barrel in New York as Chinese equities advanced the most in six months, spurring speculation that the country's economic growth will lead to a rebound in fuel consumption.

U.S. gasoline stockpiles fell to an 11-week low even as refinery output increased, according to an Energy Department report yesterday. The drop was more than three times analysts' estimates in a Bloomberg survey. The Shanghai Composite Index climbed 4.8 percent, the most since March 4.

"The market has probably found a bottom," said Andrey Kryuchenkov, an analyst with VTB Capital in London. "Today we're seeing a rebound from the recent correction, helped by the growth in positive sentiment across markets generally and optimism in China."

Crude oil for October delivery increased as much as $1.34, or 2 percent, to $69.39 a barrel on the New York Mercantile Exchange, and traded at $69.13 at 12:01 a.m. in London. Yesterday, the contract settled unchanged at $68.05, the first time this has happened since Nov. 24, 2006. Prices have gained 55 percent this year.

U.S. fuel consumption averaged 19.3 million barrels a day in the four weeks ended Aug. 28, up 0.1 percent from a year earlier, the Energy Department said. Gasoline inventories tumbled 2.97 million barrels from a week earlier to 205.1 million. Refineries produced 9.2 million barrels a day of the motor fuel, the highest in six weeks.

Market Cue

"U.S. oil demand has reached a turning point, with demand indications now likely to turn increasingly positive over the rest of the year," commodities analysts at Barclays Capital, led by Paul Horsnell, said in a report. "Gasoline demand patterns seem to have been a reasonably good indicator, almost a leading indicator, as to the timing of the U.S. recession."

The Organization of Petroleum Exporting Countries will probably maintain its output targets at a Sept. 9 policy meeting in Vienna, according to the group's president and a Bloomberg survey of analysts.

All of the 26 analysts surveyed by Bloomberg News before OPEC's summit predicted the organization will maintain its target at 24.845 million barrels a day.

"The world economy is recovering," Jose Maria Botelho de Vasconcelos, OPEC president and Angola's oil minister, said in an interview in Luanda yesterday. "Everything shows that they will keep output unchanged."

OPEC Output

The 12-member group, which pumps 40 percent of the world's oil, hasn't officially increased output since pledging a series of reductions up to December.

Masoud Mir-Kazemi won approval from Iran's parliament today as oil minister, overcoming objections that he lacked the experience to run energy policy in OPEC's second-largest producer. He will replace Gholamhossein Nozari, who was oil minister from 2007.

Brent crude oil for October settlement traded at $68.24 a barrel, up 58 cents, on the London-based ICE Futures Europe exchange at 11:34 a.m. London time. Yesterday, the contract declined 7 cents to $67.66, the lowest settlement since July 29.

Last Updated: September 3, 2009 07:02 EDT

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Oil Rises Before OPEC Meeting as Weak Dollar Boosts Commodities


By Alexander Kwiatkowski

Sept. 8 (Bloomberg) -- Oil rose, gaining the most in three weeks in London after the dollar dropped against the euro, spurring demand for commodities as OPEC ministers gathered in Vienna to decide crude output levels.

The global oil market is in "good shape," Saudi Arabian Oil Minister Ali al-Naimi said in Vienna before tomorrow's OPEC meeting, signaling the group is unlikely to change its production quotas. Prices increased as the U.S. currency dropped to the lowest in almost a year against the euro and equity markets climbed.

"We are still seeing a rather weak U.S. dollar, which is supporting commodities," Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich, said by phone from Vienna. "It is pretty sure that there won't be an increase or decrease in production by OPEC."

In New York, oil for October delivery rose as much as $1.72, or 2.5 percent, from the Sept. 4 close to $69.74 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $69.41 a barrel at 12:07 p.m. London time.

Floor trading was shut yesterday for the Labor Day holiday in the U.S. Electronic trades yesterday will be booked today for settlement purposes.

Brent crude oil for October settlement rose as much as $1.68, or 2.5 percent, to $68.21 a barrel on the London-based ICE Futures exchange. That's the biggest increase since Aug. 19. It was at $67.99 a barrel at 12:06 p.m. local time. The contract fell 29 cents, or 0.4 percent, to $66.53 a barrel yesterday.

Weaker Dollar

The dollar traded at $1.4489 against the euro, weakening from $1.4332 yesterday. A weak dollar bolsters the appeal of commodities priced in the U.S. currency that can be used to hedge against inflation. Europe's Dow Jones Stoxx 600 Index added 0.5 percent to 238.39 at 12:10 p.m. in London.

Several members of the Organization of Petroleum Exporting Countries have said the group should keep its production target unchanged at 24.845 million barrels a day when it meets tomorrow. All of the 26 analysts surveyed by Bloomberg News predicted the organization will keep quotas steady.

"The market is in a very good shape, very well supplied," Saudi Arabia's Al-Naimi said before the conference. "The price is good for everybody, consumers, producers."

The group, which pumps about 40 percent of the world's oil, cut quotas by 4.2 million barrels a day between September and December to prevent a glut amid the global recession. Oil prices are within a "satisfactory range," OPEC President and Angolan Oil Minister Jose Maria Botelho de Vasconcelos said in Luanda today before leaving for the group's meeting.

"The OPEC meeting will be a non-event for the market," said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. "I don't think anybody really expects a change."



Last Updated: September 8, 2009 07:37 EDT

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October, Front Month Crude settled at $71.10, up $3.08 on the day, October front month Natural Gas settled at $2.87, $0.079 on the day.

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Crude Oil Trades Near $71 as Dollar Pares Losses, Equities Drop



By Alexander Kwiatkowski

Sept. 9 (Bloomberg) -- Crude oil traded little changed near $71 a barrel as the dollar pared losses against the euro, reducing the appeal of commodities while OPEC ministers gathered in Vienna to decide crude output levels.

Oil gained as much as 5.5 percent yesterday as the U.S. currency dropped to the lowest level this year and on speculation that inflation will accelerate. The Organization of Petroleum Exporting Countries should maintain existing output quotas and improve compliance when it meets today, the group's production-monitoring committee recommended late yesterday.

"The market is consolidating after yesterday's dollar sell-off," said Andrey Kryuchenkov, an analyst with VTB Capital in London. "Oil is range-bound as the dollar has pulled back a little. The market will sit quiet ahead of the OPEC meeting."

Crude oil for October delivery was at $71.07 a barrel, down 3 cents in electronic trading on the New York Mercantile Exchange at 9:50 a.m. in London. Yesterday, the contract rose $3.08, or 4.5 percent, to $71.10, the biggest gain since Aug. 19. Prices are up 60 percent this year.

The U.S. currency traded little changed at $1.4474 per euro, after weakening to $1.4518. A strengthening dollar reduces the appeal of commodities as a hedge against inflation.

Europe's Dow Jones Stoxx 600 Index slipped 0.5 percent at 9.14 a.m. in London, retreating from an 11-month high. The MSCI Asia Pacific Index also declined.

OPEC members have said the 12-member group should keep its output target unchanged at 24.845 million barrels a day when it gathers today in Vienna.

'More Compliance'

"We need more compliance" with existing production targets, Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah told reporters today in Vienna. "I don't foresee any cut," he said, when asked at what price level the group might consider a further supply reduction.

All of the 26 analysts surveyed by Bloomberg News predicted the organization will keep quotas steady.

OPEC's Ministerial Monitoring Committee met for an hour yesterday evening at the group's Vienna headquarters to review data on OPEC oil supply and demand. The MMC, comprising officials from Iran, Nigeria and Kuwait, often recommends a course of action for the full meeting of OPEC ministers, which convenes at 9:30 p.m. local time, after dark because the summit falls in the Muslim holy month of Ramadan.

"It's very unlikely that they're going to change production quotas," Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich, said in a Bloomberg Television interview. "The market is basically where they want it to be. It's around the $70 mark."

U.S. Inventories

Brent crude oil for October settlement traded at $69.35 a barrel, down 7 cents on the London-based ICE Futures Europe exchange at 9:50 a.m. in London. Yesterday, it rose $2.89, or 4.3 percent, to settle at $69.42, the first gain in seven days.

U.S. crude oil inventories probably declined 1.6 million barrels from 343.4 million in the week to Sept. 4, according to the median of 12 estimates by analysts before an Energy Department report this week.

Refineries operated at 86.8 percent of capacity last week, down 0.4 percentage point from the previous week, according to the median of survey responses.

Gasoline inventories probably fell 1.5 million barrels from 205.1 million the week before, the survey showed. Supplies of distillate fuel rose 875,000 barrels from 163.6 million the prior week. Stockpiles in the week ended Aug. 28 were at the highest level since October 1983.

The department is scheduled to release its Weekly Petroleum Status Report in Washington tomorrow, a day later than usual because of the Labor Day holiday.

Last Updated: September 9, 2009 04:54 EDT

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OPEC Agrees to Keep Oil Production Quotas Unchanged (Update3)



By Fred Pals and Ayesha Daya

Sept. 10 (Bloomberg) -- OPEC said it will keep oil production quotas unchanged, banking on a recovery in the world economy to maintain prices near today's $72 a barrel.

The Organization of Petroleum Exporting Countries agreed to maintain total production quotas at 24.845 million barrels a day, and will urge members to adhere to their targets, OPEC Secretary-General Abdalla El-Badri said at a press briefing. It's the third time in 2009 the group has met without changing output.

"Holding production was the prudent thing to do," Jason Schenker, president of Texas-based consultants Prestige Economics LLC, said in an interview in Vienna.

The producer group, which accounts for about 40 percent of global crude supply, had been expected by analysts and most ministers to keep output unchanged after prices rallied. Oil has gained 61 percent this year, last month reaching the $75 level identified by Saudi King Abdullah as satisfactory for consumers and producers.

Crude oil advanced for a fourth day with contract for October delivery climbing as much as $1.13, or 1.6 percent, to $72.44 a barrel on the New York Mercantile Exchange today.

"This $65 to $75 range seems amenable to both producers and consumers," Schenker said. "If they'd cut when production is above quotas, and prices are amenable, it may not have been received well."

Three-Hour Talks

Algerian Oil Minister Chakib Khelil and Qatari Energy Minister Abdullah bin Hamad al-Attiyah confirmed the decision as they left OPEC's headquarters at about 1 a.m. Vienna time today, after closed door talks lasting three hours.

"OPEC has played its cards very well," considering that there has been a significant economic slowdown in some of the major consuming nations and regions, said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. "They were probably correct in not cutting output further at the beginning of this year. They have to be relatively happy with where prices are"

OPEC agreed late last year to cut production targets by 4.2 million barrels a day after prices crashed more than $100 a barrel from a record set in July 2008. Oil dipped to $32.40 in December before recovering this year. In the past five months, production has risen from the 11 OPEC members bound by quotas.

The 11 members bound by quotas pumped 26.055 million barrels a day in August, according to estimates in a Bloomberg survey, which indicates quota compliance of about 71 percent.

Compliance Improving

Compliance with existing production quotas is improving and prices may rise further by the end of the year, Algeria's Khelil said. Late yesterday, Ali al-Naimi, the oil minister for Saudi Arabia, OPEC's biggest producer, told reporters "we are enjoying a good, fair price" for oil, so any slippage in compliance with production quotas is not a concern while prices are "perfect."

Ministers from several OPEC member states including Kuwait and Venezuela had said this week they didn't expect any change in allowed production volumes. Quotas were last changed in December. All 26 analysts surveyed by Bloomberg News last week also forecast no change in quotas.

Only Saudi Arabia, Kuwait and Qatar pumped less than their target last month, according to Bloomberg estimates. Iran, Angola and Venezuela were the biggest quota busters. Iraq is the only OPEC member which does not have production limits.

"Everybody should adhere to his production allocation," OPEC's el-Badri said. There are "positive signs" oil demand will pick up in 2010, he added.

Oil Demand Rising

World oil demand is expected to rise 1.6 percent next year to 85.25 million barrels a day, according to a report last month by the Paris-based International Energy Agency, led mainly by gains in developing nations.

OPEC members will make $559 billion in net sales from crude exports this year, down 42 percent from 2008, the U.S. Energy Department reported. The figure was little changed from last month's forecast of $555 billion. OPEC made $971 billion last year and is forecast to make $675 billion in 2010.

OPEC will meet next in Luanda, Angola, on Dec. 22, and again in Vienna on March 17 next year, the group said.